Law or Codes – Germany Works on Business and Human Rights Plan

Will brands, retailers and other buying companies voluntarily respect human rights in their global supply chains? Are voluntary commitments reliable, or do we need legislation? Can consumer country laws help improve working life in producer regions?

These questions were very much present when German businesses and stakeholders met recently for a third and final conference in the run-up to a National Action Plan for implementing the UN Guiding Principles on Business and Human Rights.  Next step will be drafting a proposal to be discussed with all stakeholders, beginning early next year.

How will Germany build a balance between civil society expectations and business preparedness? All of us who are engaged in promoting supply chain responsibility are surely waiting to see how the country will apply the business part of the UN Guiding Principles – “Protect, Respect and Remedy”.

Germany’s National Action Plan will influence also other countries. Europe’s biggest economy is actively promoting sustainability in global supply chains. We have seen this clearly during its 2015 G7 Presidency when the country has put business and human rights on the leading industrialised countries’ common agenda.

Business concerned over unwanted negative effects

In Berlin, business representatives and social advocacy organisations were far from each other when speaking about voluntary initiatives and binding legislation.

Most business representatives preferred voluntary action as the best way to apply the due diligence required by the UN Guiding Principles. They were concerned that legislation and possible sanctions could lead many buyers to leave sensitive supplier countries and regions when they should stay and help improve conditions. If Germany would introduce more obligations for buyer companies than those of competing countries it would put the country’s business sector at a clear disadvantage, it was said.

Corporate speakers questioned whether small and medium enterprises really have the knowledge and capacity to deal with new regulations.

Business is not a uniform group but consists of companies on very different levels when it comes to sustainability issues. For ‘the best in class’, even a demanding National Action Plan would bring little change as their voluntary approaches already go much further.

This has been all too slow. Fully understanding that changes take time there should already be major improvements in the big picture.

Sub-standard wages and uncontrolled excessive working hours remain the reality in many parts of the supply chains. There is less child labour, but still too much. Forced labour continues to be a problem in some industries and regions, and freedom of association is frequently ignored. Farming is a weak area for many schemes and initiatives.

If buying companies and other businesses want to be credible when pushing for voluntary due diligence approaches they need to show more concrete results, on all fundamental human and workers’ rights issues.

Unions question CSR effectiveness 

Global unions have a more negative attitude towards voluntary corporate social responsibility initiatives than before. They say that there have been little if any results from corporate social responsibility programmes. This has driven them to close alliances with social advocacy organisations.

Deteriorating labour relations has a negative influence on supply chain cooperation. Collective bargaining has turned into a defensive union struggle as new wealth to share in negotiations is not generated anymore. Social dialogue suffers and aggressive campaigning has increased.

Trade unions do have a point when they criticise brands and retailers for largely ignoring freedom of association in supply chains. Many buyers demand that suppliers comply with child labour, forced labour and anti-discrimination rules but are quick to leave trade union rights out. This can give suppliers the impression of having a free hand to resist organising efforts. Many companies are also reluctant to engage in joint projects with worker organisations, although here the distrust is often mutual.

Unions and advocacy organisations are calling for binding legislation in consumer countries, as part of the National Action Plans. This would include the right to initiate collective legal proceedings, something like the U.S. class action lawsuits. They also call for legal sanctions against companies in these countries if they ignore their due diligence obligations.

The role of social standards and codes

Social standard and codes will continue to be important tools, as will social auditing. Collective bargaining and social dialogue between employers and workers’ trade unions can often not replace these functions.  There are no structured labour relations in many countries and regions, and all governments do not effectively guarantee decent conditions. This will continue into the foreseeable future. The aim must be that labour conditions are eventually set by local partners, through mainstream tripartite procedures. Also corporate responsibility initiatives and activities must be geared in this direction.

Environmental and other initiatives pay increasing attention to human rights and labour conditions. They are responding to business demands but also protecting their own quality and reliability. The Global Organic Textile Standard GOTS where I am engaged certifies organic textiles through a highly demanding process. The same serious and demanding approach applies to human rights and labour conditions. Many others are doing the same which does not mean their standards or codes or other tools would be as detailed as those of specialised social responsibility initiatives. There is in fact already much cooperation around capacity building, training and other activities, as well as in auditor accreditation. The National Action Plans will surely intensify this cooperation.

Whether a scheme or initiative calls itself multi-stakeholder or business driven does not have to make a big difference. Important is that they are serious, demanding and committed and produce results. Social Accountability International SAI, the Ethical Trading Initiative ETI, the Business Social Compliance Initiative BSCI, the Fair Labor Association FLA and the Fair Wear Foundation FWF are examples of cross-industrial initiatives which have set their standards and ambitions high, and which are working actively with remediation programmes. The Fairtrade movement has a similar approach in its own niches of the global economy.

None of these initiatives can guarantee that every workplace audit produces absolutely reliable results, but as verifying and certifying demands and social auditors’ skills grow, also reliability increases.

More than voluntary, less than legislation?

I would expect an approach by the Berlin government that goes further than only demanding voluntary commitments by businesses to apply due diligence in global supply chains. This would not necessarily mean that sweeping legal responsibilities or tight sanctions for buying brands and retailers would be put in place.

A National Action Plan is of course exactly what it is called, an action plan, not legislation. It is more about the process towards more responsible business practices than about a set end result.

A solution is surely now sought that meets at least part of the civil society expectations while protecting and promoting German business interests. Responsible politicians and government agencies will have a difficult task as there seems to be a mutual lack of confidence especially between business organisations and social advocacy movements. When political positioning now is giving way to concrete drafting, Germany’s influential trade unions could well play a constructive role in looking for balanced and realistic compromises.

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I represented the Global Organic Textile Standard GOTS at the meeting in Berlin. Human rights and labour conditions are important concerns for this organisation which is engaged in updating its certification standard. Above all, training and capacity building ‘on the ground’ is developed and growing.

This article does not express the views of GOTS and I do not write it as a GOTS representative.  These are my personal reflections and opinions, of course influenced by my background in the global trade union movement and my very active board engagements in the Global Social Compliance Programme GSCP and Social Accountability International SAI,which owns the SA8000 Social Standard.